Mendenhall's take on transforming HP

Since being named senior VP-CMO, Michael Mendenhall has led Hewlett-Packard Co.'s marketing efforts as it transformed itself from a hardware and software company into an end-to-end IT services company.
In the following interview with BtoB, Mendenhall talks about HP's changing relationships with its agency partners and what it takes to be successful in these challenging times.
BtoB: You recently consolidated your $1 billion global media business with Omnicom Media Group. Why did this make sense, and how are you working with your agency partners differently?Mendenhall: The company had not put its media planning, buying and optimization function up for review in about 12 years. The consumption of information has changed pretty dramatically over the past decade. It became important for us to look at how our shift in media optimization has changed over that decade, and what we would look for in a partner, relative to our current and future state of media planning, buying and optimization function.
We spend a great deal of time and applied resources in the digital area, so no matter which company we ended up going with, they had to be incredibly strong in digital.
BtoB: How much of your media mix is currently digital, and where do you want it to be?Mendenhall: I would say more than most. It is growing very rapidly. As you think about many companies and brands, there is an engagement model that exists online and in the digital environment that has become very robust, especially in a marketplace that is leaning more toward transactional marketing, lower cost-per-capture, and better efficiencies and returns.
BtoB: Can you talk about how the recession is impacting your marketing plans and budgets this year?Mendenhall: We remain very focused on our company's core strategy. Companies that are operationally strong will do, and historically have done, far better in a recession than those that are not prepared. HP is incredibly prepared for the economic climate we're in, which is very dynamic and unpredictable.
What becomes important in a dynamic marketplace is less fixed costs and more variables, so you can respond more quickly to changing demands. Certain of our businesses are countercyclical relative to our services and enterprise businesses. As we begin to look at the strategy that has played out at HP, building from hardware, to software to services and participating in multiple segments, and the fact that 69% of our revenue came from outside the U.S. last year, these are some of the capabilities that can buffer a company a little bit in a downturn.
BtoB: What types of marketing programs are you using this year?Mendenhall: We're using a combination of many things—direct, in-channel—it depends on the go-to-market mix. We are flexible in our variables, and we have not fundamentally overhauled our strategy. We have taken market share, and we continue to stay very focused on those products and services that have built growth and continue to do so.
BtoB: What do you believe you have accomplished over the past 18 months, and what is still ahead?Mendenhall: We have really worked to build our company into a world-class global citizen. Our reputation as a company has improved, and we have benchmarked incredibly well on many levels, based on independent research. I think you will see the value of our brand go up, though you are never through transforming a company. M